Zurin Arctus was a powerful mage, particularly within the school of Destruction. He was considered one of the best mages of his era, and authored a number of classic magical volumes (see: The Art of War Magic). When Tiber Septim, who was then General Talos, became the de-facto leader of Cyrodiil, Arctus was a natural choice to serve as his Imperial Battlemage, for his superiority in Destruction made him a powerful Battlemage.
Near the end of the Second Era, in the 2E 9th century, Tiber Septim came into possession of a potent magical weapon: the Numidium. This giant golem was originally constructed by Kagrenac, the Dwemer high priest, in an attempt to lift his race above their own mortality. The golem had been in the possession of the Dunmer, specifically the Tribunal, since the defeat of the Dwemer and their disappeance from the province of Tamriel. Vivec made a deal with Septim; in exchange for the use of Numidium, Morrowind would voluntarily join the Cyrodiilic Empire but be given a high degree of autonomy of government, much moreso that the other provinces had. Some sources claim that Arctus himself was directly responsible for obtaining the use of Numidium, and so became a powerful sorcerer not soon after.
However, there was one problem with the Numidium that Tiber Septim needed to solve. The original plan was for the Dwemer to use the Heart of Lorkhan to power the device, thus granting Numidium god-like powers. The mere existence of the Heart of Lorkhan was one of the most closely guarded secrets in all of Tamriel. Even had Vivec been willing to divulge the existence of the Heart, or even its location under Red Mountain, it is unlikely that the Tribunal would have turned over the source of their divine power to the Imperials. Their immortality was not a bargainable thing with mortals of lesser power. Septim tasked Arctus with solving this problem, and the result was the creation of the Mantella, another powerful item.
Arcuts created the Mantella, a huge green gem, to house the required energy to power the device. Accounts from the time differ on exactly how the Mantella was filled; the official Imperial histories claim that Septim himself gave his heart to create it (thus, it is sometimes called the Heart of Tiber Septim). The Arcturian Heresy, described in more depth later, claims that the "real" Underking's soul was trapped by Arctus, killing them both in the struggle. Events surrounding the Numidium during the Third Era, in the Illiac Bay area of High Rock and Hammerfell, strongly suggest that it was Arctus, not Septim, who gave his heart to power the Mantella. It is unclear if this act was voluntary, though at least Mannimarco claims that Arctus was betrayed. In either case, if the Mantella was, in fact, the heart of Zurin Arctus, its loss did not kill him; quite the opposite, his soul now refused to leave his body, and he lived on as theUnderking and reaved the souls of others as a powerful Necromancer-like figure.
The Underking would proceed to cause problems for Septim for the remainder of his rule. His first major act was the destruction of the Numidium itself. By this time, according to some sources, Septim had been abusing the power of the Numidium against harmless, politically neutral parties. Arctus took offense at this, and smashed the golem to pieces, with the Totem being lost at the bottom of Illiac Bay, and the Mantella being sent to another plane of Aetherius for safe keeping. If Arctus was not already undead by this point, he undoubtedly was afterward.
Years later, in 3E 36, the Underking managed to infiltrate and corrupt the fortress of Sancre Tor. Previously, this site had been used as a tomb for the Reman line of Cyrodiilic kings, and Septim's Blades had set up a shrine to Septim containing his armor. The Underking sealed off the room containing Septim's armor, and populated the site with undead minions. Septim sent four of his Blades to the site to retrieve his armor, where they were trapped by the Underking and turned into undead guardians. After this, the Grandmaster of the Blades sealed the entrace to the tomb to prevent any further loss of life.
After these events the Underking essentially vanished from Tamriel's history for hundreds of years. For the next approximately 400 years, no mention of him occurs in public record. Mannimarco, by this time also a powerful undead lich known as the King of Worms, does indicate that he had been in conflict with the Underking for centuries; this leads to speculation that the Underking was, in fact, working for the good of the Empire after all.
During the reign of Uriel Septim VII, both the Numidium and the Totem are found in the Illiac Bay region. This nearly set off a civil war amongst the dozens of independant city-states in the region, beginning with the murder of the King of Daggerfall. Ultimately, an anonymous hero traveled to the plane of Aetherius where the Mantella was located, and returned to Nirn with it to activate Numidium. As soon as the golem became active, the Underking arrived, destroyed the golem, retrieved his heart from the Mantella, and finally passed into true death.
Once the Underking was gone, his hold over Sancre Tor diminished. The four undead Blades are finally laid to rest, after they collectively shatter the enchantment that imprisoned Septim's armor.
The Arcturian Heresy
A controversial, early historical account, The Arcturian Heresy, contradicts almost every accepted "fact" about the Underking and Zurin Arctus, claiming that Septim revised history upon taking the throne to protect himself and his reputation. The book identifies the Underking not as Zurin Arctus, but as King Wulfharth, an Atmoran who would become King Ysmir of the Nords around 1E 500. According to this account, after being defeated at Red Mountain, in the same battle that saw the disappearance of the Dwemer, Wulfharth returned to Skyrim and became Ysmir, driving out the Alessian religion from the Nords and reinstating their old gods. He then waited for nearly three hundred years, until the Nord Greybeards began speaking of the rise of Talos, who would defeat the Nords' ancient enemies, the mer, once and for all.
The Underking worked his way into the role of advisor to General Talos, constantly urging him to invade Morrowind. Talos refused, choosing to concentrate first on the other human provinces such as Hammerfell. When Talos found the Numidium, however, and realized he would need a strong soul to power it, he tricked the Underking. His Battlemage, Zurin Arctus, trapped the Underking's soul in the Mantella, but not before the Underking managed to blast Arctus' heart out and kill off Septim's guard. As he was the only one left alive, Septim now began to perpetuate the lie that Arctus betrayed his county, and tried to kill the Emperor; and that, in retribution, his heart was trapped in the Mantella. As the Underking did not truly die, however, Septim needed to explain his existence, and claimed that Arctus himself was the undead lich, returned to take revenge for his death.